Tuesday, April 1, 2014

On the Death of John Pierpont Morgan

Cartoon showing John Pierpont Morgan and Uncle Sam rowing a boat. From LOC.gov
John Pierpont Morgan and Uncle Sam rowing a boat, circa 1911. From LOC.gov.

You might think I was April Foolin' if I said that there was a time when the death of a banker caused national mourning. But such was the case on April 1, 1913.

"World Mourns Loss of Great Financier," the New York Sun headline ran reporting on the death of John Pierpont Morgan. Flags flew at half-mast. The New York Stock Exchange suspended operations.

Though Mr. Morgan was 76 when he died, his demise was attributed to "emotions caused by the investigation carried out by the Pujo committee." Formed in May 1912 by Arsène Pujo of Louisiana, the congressional subcommittee's purpose was to show that the "panic of 1907 was a manufactured panic which would have been impossible had it not been for the concentration of money and its control in a group of Wall St. financiers," reported the San Francisco Call in December 1912.

Newspaper reports that the House of Morgan controlled $25 billion, a large sum even by today's standards, startled everyday Americans whose average salary at the time was $800 per year.

Congressmen denied the accusations. "The insinuation that the committee's courteous examination of Mr. Morgan contributed in any manner whatever to his demise appears to be a studied attempt make capital (hah!) of his death, and to arouse sympathy for a system that in many respects is at a decided variance with the interests of our people," Congressmen Neely of Kansas said in the Washington Times.

In the end, it was the Congress that capitalized. Within a year of Morgan's death, sweeping legislation designed to redistribute wealth was enacted, including: the 16th Amendment (1913) giving Congress the power to levy income tax; the Clayton Antitrust Act (1913) to reign in monopolies; and with the Federal Reserve Act (1914) government-sponsored centralized banking.

While the cause of JPM's death was in dispute, his impact was not, at least according to the many condolences reprinted in the New York Tribune.

"It is hard to give an estimate of the loss which the entire country has suffered through Mr. Morgan's death," wrote fellow banker Joseph Harriman. "He was a great organizer and developer and the monuments that he reared will live for all time. Not the least great and lasting work to his credit is the wonderfully equipped banking firm he has left behind him, which will perpetuate his name for many years to come."

Indeed, today, with over $2 trillion in assets, JP Morgan Chase is the largest bank in the United States.

Flannery O'Connor

You shall know the truth and the truth shall make you odd.